Barclays (BCS) Fails To Get Rid Of Dark Pool Class Action

Barclays (LON:BARC) PLC (NYSE:BCS) was unsuccessful in convincing the U.S. appeals court to undo the class action lawsuit that accused it of cheating its shareholders with regard to the private trading platforms or dark rooms, as per a Reuters report.

Per the decision passed yesterday, the second U.S. Circuit Court of Appeals in New York allows investors in Barclays' American depository shares to take legal action against the bank as a group. Class action means that complainants are allowed to recover more money from the bank than they could individually recover by suing the bank. It is a collective effort by all the investors, who were cheated.

In February 2016, Barclays agreed to settle probes by U.S. regulators related to their dark pools. Per the settlement terms with the U.S. Securities and Exchange Commission (“SEC”) and the New York Attorney General (“NYAG”), they had to pay $70 million in fine, to be equally divided between the SEC and the NYAG.

The probes pertained to allegations that Barclays had made false representations about protecting investors’ interest in the dark pools from high-frequency traders. Notably, Barclays was sued by the NYAG in June 2014 over the issue, which led to a 7.4% fall in stock price the next day. Thus, as per Circuit Judge Christopher Droney, the class action was the correct verdict because investors suffered as a result of a sudden decline in the stock price.

The lawsuit had accused Barclays of misleading investors by presenting tampered information and assuring them that their orders were spread across trading exchanges. The company had instead channeled maximum orders into the dark pool without informing investors about the same.

Shares of Barclays have gained 4.2% over the last 12 months, underperforming the industry’s rally of 23.1%.

Currently, Barclays carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

Some better-ranked stocks in the same space are KB Financial Group, Inc. (NYSE:KB) and Erste Group Bank AG (OTC:EBKDY) , each sporting a Zacks #1 Rank, and The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) carrying a Zacks #2 Rank (Buy).

KB Financial has witnessed an upward earnings estimate revision of 11.1% for 2017, over the past 30 days. Its share price has risen 45.4% over the past 12 months.

For Erste Group, over the past 30 days, the Zacks Consensus Estimate has been revised 19.2% upward for 2017. Its share price has increased 42.7% over the past 12 months.

Bank of N.T. Butterfield & Son has witnessed an upward earnings estimate revision of 2.2% for 2017, over the past 30 days. Over the past 12 months, its share price is up 24.8%.

Zacks' Hidden Trades

While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?

Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.

Click here for Zacks' secret trade>>